Could we have avoided the 2007 crisis if economists had taken on board the practices of ‘behavioural economics’?

Robert Shiller discusses the revolution in ‘behavioural economics’ on Social Science Bites

By Katie Baker, UK PR Team

Over the past 20 years, a revolution in economics has taken place, making us question the true value of conventional economics theory and ask what the value of combining economics with social sciences is. Technically known as ‘behavioural economics’ (the study not of how people would behave if they were perfectly rational, but how they actually behave), Robert Shiller, University of Yale, discusses its practical application with Dr. Nigel Warburton in the latest Social Science Bites podcast.

“Economists missed the 2007 crisis as they did not want to use their initiative or look at the perceptions of how people were thinking. Economists just sometimes don’t see the obvious, they don’t rely on the mental faculties of human judgement that they have, and they do not look to a broader view of people that is informed by psychological or sociological research.” Robert Shiller, University of Yale

What is behavioural economics? What is its practical value in today’s society and economic studies? Could a greater understanding help reduce the number of economic crashes? Listen to the podcast in full.

Social Science Bites are produced in association with SAGE. Want to listen to more? Here is where you can find others in the series which include;

 

     
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